April 17, 2010 / 4:56 AM / 9 years ago

China should use more reserves to buy gold-researcher

BEIJING, April 17 (Reuters) - China should use more of its massive foreign exchange reserves to buy gold to support its aim of raising the international role of the yuan currency, a senior government researcher said on Saturday.

Li Lianzhong, who heads the economic department of the Communist Party’s policy research office, said that Beijing should also encourage domestic enterprises to acquire foreign energy and natural resource assets by using part of the foreign exchange reserves.

“We can also consider buying some more gold because if we want to develop the RMB into an international currency, we must have some scale of gold reserves,” Li told a forum in Beijing. The yuan is also known as the renminbi.

China’s foreign exchange reserves, the world’s largest, rose to $2.4471 trillion by the end of March.

China disclosed last April that its official gold holdings had risen to 1,054 tonnes from 600 tonnes in 2003, confirming years of speculation it had been buying. [ID:nPEK307477]

But gold is still a small portion of its huge foreign exchange reserves, which are mostly invested in dollar-denominated assets.

The tumbling U.S. dollar has threatened to weaken China’s buying power, fuelling a debate that the world’s third-largest economy should diversify into gold, oil and metals. (Reporting by Aileen Wang and Jacqueline Wong)

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